While Amazon Web Services (AWS) clearly won over the early market developer community in small to large enterprise and government organizations and thus gained major market share in Iaas during the past five years or more, reporter Quentin Hardy argued in a recent article in NYT’s Bits online magazine that, alongside the recent slowing of growth in AWS’s cloud business from 50% y/y to 37%, Google and Microsoft have much larger cash arsenals with which fight a price-war. In the new stage of enterprise cloud computing adoption, where CIOs and line-of-business executives will make more of the decisions than the early developers, Hardy argues: “Price, people and time are costs that don’t play well for AWS., given the big competitors now seriously in the business. In its most recent quarters, Amazon had $5 billion in cash and marketable securities. Google had $59 billion, and Microsoft had $88 billion. IBM, which is also building a public cloud business, had $10 billion and a substantial amount of debt to service.”

While it is not a trivial matter to dislodge a gorilla, when the market switches gears to a more business/IT driven mode, changes in market share can happen. Furthermore, it’s not clear that in the current race to the bottom in pricing, Amazon can afford to use all its ammo against Google and Microsoft, particularly since it is now under greater pressure than ever from investors to put an end to its 20-year run of profitless prosperity.

As Hardy argues in his conclusion: “What Amazon’s service does have is a great roster of named clients, and probably lots more companies that aren’t ready to admit somebody else runs their computers. It has an enormous cloud and a technical understanding of global-scale computing that is second to none. All it needs is a bigger sales team for businesses and a way to get its checks signed faster.” My take is that each of the three strongest candidates in the broad mass market – AWS, Google, and Microsoft – has their own assets and their own liabilities. IBM knows best of all four companies – or used to know best, before the cutting spree that’s been going on for the past several years under CEOs Palmisano and Rometty – how to develop, resource, and manage enterprise relationships. Google has enormous data-center expertise though in different applications (primarily search and video/other storage, powered by sophisticated big data and analytics machine-learning technologies) than Amazon’s (primarily managing the largest e-commerce site in the world).

Microsoft might be the most likely of the bunch to push AWS into second place with its Azure infrastructure service, which seems to be coming on strong. Both Google and Amazon have the same disadvantage as Amazon regarding enterprise relationship management knowhow and resources, so while they’ll win some of the lowest-price-oriented RFPs I’m not sure that they will necessarily do as well with the security and “reassurance-oriented” one-throat-to-choke deals as the category and market mature – despite the major win they had against IBM with the CIA contract. But there’s still time, it’s still early innings in this particular baseball game. Each of these players is going to have to be very thoughtful about their 1-2 differentiating crown jewels – technology, domain expertise, cash, reputation, market share, use cases, reference customers, whatever they may be – in order to weigh their respective go-to-market investments and avoid wasting precious resources on battles they can’t win. But when mass-market price wars break out, good sense and enlightened self-interest have a habit of vanishing.

Meanwhile, what about other Iaas companies like Rackspace, Centurylink, and others? These companies will do well as long as they (a) get over the fact that they won’t become mass-market winners and (b) target significant niche markets – verticals, geos, or specific types of customer and/or use case, however they define them – that the larger players ignore or cannot serve well but where they have a superior “act” and deliverables to offer.

I’ll be interested to hear what readers think of this continuing competition…